GUNDLACH: This Chart Shows That 'The 2013 Markets Playbook Will Not Be The Winning Playbook For 2014'

It's an overlay of the US dollar / emerging-market currency
exchange rate and the yield on the 10-year Treasury note.

Gundlach noted that there has been a remarkably tight correlation
between the two measures with the currency cross acting as a
slight leading indicator of the 10-year yield, which is the
benchmark for almost every important interest rate in the world.

Last month when he last spoke of this chart, the currency cross
was signaling a decline in the 10-year yield. And
as Gundlach correctly predicted, that yield has been tumbling
toward the 2.5% level he targeted.

“You’re correct that the relationship has broken down after being
nearly perfectly correlated last year," Gundlach said to Business
Insider today. "That’s why we’ve been following it: to see when
and how it would break down. This breakdown suggests that
the 2013 markets playbook will not be the winning playbook for
2014 – as evidenced, for example, by bonds outperforming stocks
so far.”

During his January 14 webcast, Gundlach unveiled a series of
contrarian market calls that have been doing quite well. His
prediction that the 10-year Treasury note yield would fall flew
in the face of Wall Street's consensus for it to rise to 3.4%.

He also warned that the stock market appeared to be topping,
which it did one day later. The S&P 500 is down nearly 100
points from its January 15 all-time high of 1,850.